Harley’s CEO wants more youngsters riding motorbikes

Harley-Davidson’s HOG new CEO Matt Levatich wants youngsters to drop their video games and pick up motorcycling as a hobby, The Wall Street Journalreported Friday.

To do so, he’s banking on lower-priced bikes designed for urban riding, and eventually he wants to produce a battery-powered alternative to the classic Hog, the paper said.

But while Levatich hopes he can get the connected generation off their tech devices and out on the road, he realizes how important these trends are for the future. “I’m in the camp of: It isn’t bad, it’s just different,” he told the publication, referring to the power of the virtual world.

Levatich adds there will be “a little bit of counterculture down the road…. People are going to want to actually live for real, and I think we have a product that has a great fit with that outlet.”

According to the newspaper:

Motorcycle revenue outside the U.S. has been stuck at about 32% of the company’s total for the past six years but is up from 18% in 2004. Harley aims to grow foreign sales faster than U.S. ones as it adds dealers in China, India and Latin America.

Harley’s “Street” model goes for as little as $6,800 in comparison to the $30,000 products the company sells, according to the publication. “For me, the most important segment is young adults—the incoming,” he added. “Are teenagers choosing to join the sport?”

Harley’s most innovative bike in years isn’t coming out soon

It has been a year since Harley-Davidson debuted the prototype for its LiveWire battery-powered motorcycle, but it could be much longer before the iconic company’s new e-bike hits the market.

The release of the LiveWire, which is far lighter and quieter than a traditional Harley HOG, shouldn’t be expected “in the next couple of years but it’s not past 2020 either, unless we run into some impossible barrier,” Harley CEO Matt Levatich told The Wall Street Journal.

Levatich, who had not previously put a time frame on the LiveWire’s release, added that the company is working to increase the bike’s current range between battery recharges from its current point of 50 miles to at least 100 miles.

WSJ added:

Harley is betting its dominant U.S. market share in traditional motorcycles and the company’s marketing clout mean it can afford to give others a head start.

Mr. Levatich said Harley would await improvements in battery technology so the LiveWire can have the performance he believes buyers expect. “Will we get to that Nirvana that customers say they want? Probably not,” he said. “Will we get close enough? I believe we will.”

The LiveWire, which features a digital display between its handlebars to indicate speed and serve other functions, is part of Harley’s push to attract younger customers beyond the company’s traditional baby boomer market. The company already has plenty of competition in the electric motorcycle market, including Zero Motorcycles as well as Polaris Industries PII, which plans to release an electric bike later this year.

And, while customers cannot yet buy the LiveWire, they can check it out in action on the big screen. The latest Marvel blockbuster, Avengers: Age of Ultron, features a prototype version of the electric bike driven by actress Scarlett Johanssen’s character Black Widow.

Honda Motor Co Ltd and Suzuki Motor Corp both currently offer $1,000 cash back on selected models. Suzuki has cut the suggested retail price on 13 models and Honda is offering low-interest financing.

Harley says it will not compete on price to protect its brand, a declaration welcomed by industry analysts.

“They (Harley) are taking a reasonable long-term view of the market,” said Michael Millman, founder of Millman Research Associates in New Jersey. “They want to maintain their pricing and their image and will have to take some of the competitive knocks that go with that.”

Harley also reported earnings per diluted share of $1.27 yesterday, along with net income of $269.9 million.

How Harley-Davidson keeps things small, even as they grow

Putting labels on a new shipment of t-shirts may not seem like the best use of a senior executive’s time, but for Mike Peyton, director of channel strategy for Harley-Davidson, the days he spent working at two Harley stores in Pennsylvania last year were an eye opener.

Peyton’s most profound realization came when he had to process a warranty claim on a motorcycle part. “I realized there’s lots of double work—the dealer has to enter the same info twice—because one system doesn’t communicate with the other,” he says. “Sitting in the head office, it’s very easy to make assumptions about how dealers do things—with no knowledge of how difficult it can be to use our systems and processes.”

A few years ago, Harley-Davidson HOG executives began to see that the company’s growth (it added 118 new dealers between 2009 and 2013 and now has 697 dealerships in the U.S. alone) had led to more complicated layers of management and a mushrooming number of complicated processes and programs. Although the company considered itself to be keenly aware of its customers’ needs, its dealers were not happy. Employee engagement scores were very low.

So Harley began to form informal groups of dealers who could share business practices and learn from each other. Hoping to pick up some insight into the problems the front line faced, Matt Levatich, president and COO at Harley, decided to go to an early dealer meeting.

When a dealer turned to him and asked bluntly, “Have you ever actually tried to use that system?” Levatich admitted he hadn’t—and that he probably should.

Soon afterward, Levatich spent several days working at a dealership and got a crash course in the challenges that Harley dealers face. He realized that the simple practice of walking in the dealers’ shoes was essential to bridging a widening gap between layers of the company.

A handful of other executives followed suit. Gradually, the practice—in which executives spent several days at stores on their busiest days, weekends and holidays—caught on. Eventually, it became institutionalized as a program that employees could sign up for.

Peyton says there’s been a “dramatic shift in employee engagement just in the past couple of years” because of the program. Levatich has proven he has a knack for figuring out changes in practices that will deliver a big, positive impact on the business.

Keith Ferrazzi is the CEO of consulting and research firm Ferrazzi Greenlight and the author of Never Eat Alone and Who’s Got Your Back?. David Wilkie is the CEO of World 50, a private community for senior executives to share ideas.

Editor’s note: A previous version of this story incorrectly stated that Harley-Davidson CEO Keith Wandell initially decided to spend several days working at a Harley-Davidson dealership, providing the impetus for the institutionalization of this program. Instead, it was President and COO Matt Levatich who made that first move.

Harley-Davidson revs up sales, but earnings are skidding

Harley-Davidson, the maker of the all-American motorcycle, reported better-than-expected quarterly financial results Tuesday, lifted by strong sales of its products in key markets, including the United States. Milwaukee-based Harley posted a third-quarter profit of $150.1 million, or 69 cents a share, down from $162.7 million, or 73 cents a share, a year ago. Here’s what else you need to know.

What you need to know: Sales of Harley-Davidson HOG motorcycles were up 3.3% worldwide for the quarter, largely driven by response to the new 2015 model year bikes. A total of 73,217 Harleys were sold, with significant growth seen in the American market. Sales in Europe and Latin America were mostly flat, while sales saw a modest jump year-over-year in the Asia-Pacific region. In a conference call for analysts, CEO Keith Wandell said he didn’t have numbers for what percentage of the sales were 2015 vs. 2014 models, but said the inventory mix was “moving in the right direction.”

The big number: For the first nine months of 2014, Harley-Davidson has brought in $215.4 million in financing income, which is actually down from $221.8 million for the same period in 2013. This is despite the fact that sales have gone up for the same period. This could mean Harley-Davidson is losing financing deals to rival lenders, or that more of its customers are choosing to pay in cash. Executives said on the conference call that it estimates that around 20% of all sales are straight cash.

What you might have missed: Though it was actually up this quarter, Harley-Davidson seems to be having a weak year when it comes to merchandise sales. For the first nine months of the year, they’ve sold $209.8 million worth of general merchandise, down from $220 million for the first nine months of 2013. It seems like fewer people are advertising their allegiance to Harley — whether or not they ever rode a hog, of course, is another question.

Harley-Davidson puts the brakes on 105,000 hogs

Hog riders may need to take a look at their bikes, because the recall bug has bitten the motorcycle world in a big way.

Harley-Davidson HOG announced this weekend that it is recalling more than 105,000 motorcycles for issues related to the clutch, plus 1,384 bikes for potential fuel tank issues, according to the AP.

There have been 19 reported crashes as a result of the clutch issue, though no deaths and only three minor injuries have resulted.

This isn’t the first time the American motorcycle brand has been hit by a recall this year. Harley recalled more than 66,000 bikes in July, citing possible problems with the front wheel.

Following the recall scandal that has plagued General Motors GM for much of this year, auto manufacturers are being extra cautious when it comes to recalls in an effort to avoid any allegations of not taking action fast enough.

Harley-Davidson is recalling 66,421 motorcycles from this year’s model line over problems with the bikes’ anti-lock brakes.

The Milwaukee-based company says the recall affects 2014 Touring and CVO Touring motorcycles that were built between July 1, 2013 and May 7, 2014, the company said Wednesday.

The front wheels of the bikes can lock up without notice when the front brake line is caught between the vehicle’s fuel tank and frame. The pinched line can cause a build-up of brake fluid pressure that locks the front wheel, the company says.

The defect has led to five crashes and two minor injuries. Harley-Davidson HOG plans to contact individual owners later this month and will replace affected bikes’ brake lines for free.

Earlier this year the iconic motorcycle-maker voluntarily recalled more than 18,000 bikes from its Breakout and CVO Breakout model lines due to a fuel range indicator defect. Another 29,000 motorcycles with hydraulic clutch system issues were recalled last fall.

Can a new brand of unions help America’s workers?

Hardly a day goes by when American unions are not attacked from some quarter: Last week, the Supreme Court weakens unions representing home care workers, one of the lowest paid and fastest growing occupations. This follows another ruling struck earlier last month in which a California judge threw out teacher tenure, due process and seniority rules under the dubious theory they are the cause of persistent inequality in education outcomes. And in 2011, Wisconsin’s governor decimated public sector unions by taking away state and local government employee rights to collective bargaining, reversing a policy in place since 1959.

It’s clear that for years most private sector employers have successfully fought union organizing and collective bargaining using every legal delaying tactic and in many cases illegally firing workers. Wal-Mart WMT,the nation’s largest private employer, is the most visible case in point. By deploying its union-fighting swat team from corporate headquarters to any store that shows signs of worker protest, it has remained 100 % “union-free.”

The result: Now down to representing only 7% of private-sector workers, America’s unions and collective bargaining are no longer able to provide workers the power they need to redress workplace injustices or achieve a fair share of the economic growth they help generate.

But America desperately needs a vibrant, innovative, growing, and yes powerful, set of organizations that give voice to and represent workers with their employer and in social and political local and national discourse. No democracy in the world has been sustained over time without some independent institution that stands up for and advances worker rights, interests and economic welfare. Moreover, there is an almost perfect correlation between the decline in union representation and the rise of income inequality.

Having said this, we should not be nostalgic. Trying to recreate unions in their mirror image would be both futile and ill-conceived. Instead, America needs to invent, support and grow a new and renewed labor movement that fits the needs of today and tomorrow’s workers and economy.

The good news is a wide range of experiments with new forms of mobilization and worker representation is now underway inside and outside of the labor movement.

Unions in the utility industry, health care and manufacturing industries are using knowledge and skills as the key source of worker power by expanding apprenticeship training, creating partnership with community colleges, vocational schools, and employers to fill the “middle skills” gaps that exist today or will grow as skilled baby boomers retire.

Unions at Kaiser Permanente, Harley Davidson HOG, Southwest Airlines LUV, ABC School District in Los Angeles and others are building and sustaining partnerships with employers to improve performance, quality and working conditions. These, and partnerships like them, have demonstrated they are good for employers, workers, customers and communities.

A growing number of union leaders and community activists are engaging local level business, political and other leaders in multi-party negotiations on issues critical to their local economy and workforce. In May, Seattle struck a multi-party deal to gradually increase of its minimum wage to $15 an hour.

Worker advocates are reaching out to customers interested in both good products and services and good jobs for those who produce or deliver them. This is a key to the success of the Restaurant Opportunities Centers, a group that emerged out the 9/11 tragedy in New York and asks customers to join them in rating restaurant food quality while inquiring about the quality of the jobs of those who prepare and serve their meals.

Employee associations in education, hospitality and other industries are learning from the Freelancers Union in New York to offer benefits like health care, career counseling and job opening information. In doing so, they are inching toward models that provide “life-long” individual memberships rather requiring a majority of workers in a specific firm to vote for representation in order to gain one new member, only to lose that member when he or she leaves the job.

Other groups are experimenting with use of social media to inform, educate and mobilize workers—especially young workers. Young worker groups are working with the AFL-CIO to leverage online education by supporting university courses that educate workers about what they individually and collectively can do to navigate successfully in today’s labor markets and work together to build the next generation of labor organizations.

The Steelworkers Union and others are promoting alternative corporate forms like employee ownership, cooperatives, Benefit Corporations, private equity firms that respect worker rights and value their contributions in turnaround situations. The Auto Workers led the effort to create a works council at Volkswagen.

What’s more, a number of unions on college campuses are allying with non-governmental organizations, such as United Students against Sweatshops to hold corporations accountable for enforcing labor standards throughout their global supply chains.

At the national level labor, movement leaders are drawing on the research of think tanks and academics in advocating for public and private investments in R&D, infrastructure and education—the investments that hard evidence shows creates jobs, builds human capital, and increases competitiveness and productivity.

Finally, a growing number of union leaders are abandoning the futile efforts to achieve incremental reforms of the current ossified and defunct labor law and instead are calling for opening up labor law to encourage and protect workers who experiment with these and other more fluid and varied activities free from reprisals. Once sufficient evidence is gained on what works and what doesn’t, a new national law might be constructed to bring the best performing models to national scale.

So America, it is time to stop fighting all forms of worker voice and representation and instead stand with workers seeking to regain their rightful voice and a fair share of the prosperity they help to generate.

Harley-Davidson trades leather and beards for green and clean

When you think Harley-Davidson, you probably think about leather, beards, and loud engines. Now, though, you can picture a fully electric bike with a digital display.

The iconic American motorcycle manufacturer held an event in New York City Monday afternoon showing off Project LiveWire, a prototype of the company’s first electric motorcycle.

The new bikes look mostly like a traditional motorcycle, with a few notable exceptions. There is a digital display in between the handlebars where speed and efficiency are displayed. Also, there is no clutch on the left handlebar, since there are no gears. The bike can go from zero to 60 in about 4 seconds, and can reach up to 92 m.p.h. It does not have the traditional loud Harley rev-up sound, though there is a slight hum from the electric engine starting.

Harley President Matt Levatich said it would be a few years before the bikes were ready to be manufactured and put on sale. In the meantime, it is still tweaking the design and listening to its customers.

“We don’t have specific date,” he said. “We need time to incorporate that feedback.

It was a uniquely diverse crowd gathered at the Harley-Davidson HOG dealership in Lower Manhattan — a near equal mix of buttoned-up journalists lumbering onto the LiveWire simulator (think a motorcycle stuck in place that can be “revved up” without actually going anywhere) and Harley-Davidson Riders Club Members, many of whom sported well-worn patched vests and beards that would give Rasputin a run for his money.

One of those riders, Juan Marmol, said that the new bike ran great, though he was concerned about the relative short range of the bike on a single charge of its battery. The bike can only travel around 55 miles after a three hour charge.

“It was awesome,” he said. “The biggest downfall to it right now based on what their telling us is the charge time.”

For hardcore Harley riders who sometimes go up to 400 miles a day, the current battery just wouldn’t work, Marmol said. But he did think that the new bike could change Harley-Davidson’s image and maybe bring some new people into the hog-riding family.

“I believe this will change kind of the mindset that Harley’s are for old guys,” he said.

Levatich agreed, also noting that Harley would not be forgetting its core customers who want old-fashioned motorcycles. “We’re absolutely not abandoning any of that,” he said. “We’re going to continue to invest in great traditional Harley-Davidson motorcycles. LiveWire has nothing to do with that. It’s all of that, plus opening the doors to some people that are maybe on the outside of the sport, on the outside of the brand.”

Of course, Harley-Davidson isn’t the only motor cycle maker exploring electric bikes. In fact, Other companies such as Mission Motors have already put their models on sale.

Harley-Davidson’s roadshow will travel across the United States this year and next in addition to going to Canada and Europe. The LiveWire Experience Tour continues next week in Milwaukee, Wis.